The President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, has said that Africa needs $402.2 billion annually by 2030 to fast-track its structural transformation.
Adesina made this known during the presentation of the African Economic Outlook (AEO) 2024 at the ongoing AfDB Annual Meetings in Nairobi.
The AfDB President emphasized the critical need for reforms in the global financial architecture to address the continent’s economic challenges and opportunities.
“The report highlights the glaring inadequacies of the current global financial system in closing Africa’s financing gap for structural transformation, estimated at 402.2 billion dollars annually between now and 2030.
“To rectify these disparities, the report proposes a bold agenda for reforming the global financial architecture, including in the five following key areas,’’ Adesina said.
- He emphasized the necessity of giving Africa a greater voice in Multilateral Development Banks (MDBs) and International Financial Institutions (IFIs) to reflect its growing global GDP share and rich natural resources.
- Adesina argued that transforming the global financial architecture would allow Africa a fair share of resources to capitalize on its vast economic opportunities.
- The AfDB President emphasized that the African Economic Outlook advocates for increased private sector participation to complement public investments, particularly in areas with high social returns like climate action and human capital development.
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Furthermore, Adesina urged Multilateral Development Banks (MDBs) to revise their business models to provide long-term concessional financing at scale to developing countries, thereby bolstering their capital positions.
He also recommended channelling a portion of the International Monetary Fund’s (IMF) Special Drawing Rights (SDRs) to MDBs and ensuring a healthy replenishment of the concessional windows of the African Development Bank (AfDB), the World Bank, the African Development Fund (ADF), and the International Development Association (IDA).
Recognizing the inefficiencies of existing debt resolution mechanisms, the AfDB President revealed that the African Economic Outlook (AEO) advocates for reforms to expedite debt workouts.
Adesina highlighted the need for sustainable debt management, including innovative market-based solutions like “Brady bonds,” debt relief for climate purposes, and sovereign debt authority systems.
He noted that the AEO report also stressed the importance of strengthening domestic revenue mobilization through improved tax policies and enhanced government revenue collection and utilization efficiency.
Adesina reiterated the significance of combating illicit financial flows, tax avoidance, and leveraging Africa’s abundant natural resources.
He emphasized that while domestic resource mobilization is crucial, the prudent use of such resources is equally important.
Therefore, countries should strengthen their capacity to improve public finance management.
